The UK has witnessed a 54% increase in planned redundancies over the past year, surging from 182,790 in 2021/21 to 280,760 in 2022/23, ending October 31, says specialist employment law firm GQ|Littler.
Philip Cameron, partner at GQ|Littler, attributes the surge in redundancies to increasing interest rates. He says in the UK interest rates are at a 15-year high of 5.25%, which puts a heavy financial burden on firms.
Additionally, businesses are contending with high wage inflation, as annualised regular pay growth reached 7.8% between June and August 2023, while total pay, including bonuses, grew by 8.1% during the same period.
Planned redundancies, involving 20 or more employees within 90 days, must be notified to the government.
Cameron says: “The increase in planned redundancies this year has been sharp – interest rates being ‘higher for longer’ is really starting to take its toll on business.
“Jolts in the wider economy – including wage inflation – are putting extreme pressure on businesses to find savings. Often, this means job cuts.
“Even though businesses are feeling a lot of pressure to cut payroll costs, employers should approach collective redundancies with care. A rushed redundancy programme can seriously damage a business’s reputation – and in some cases lead to litigation from disgruntled former employees with costly consequences if the employer has got it wrong.”